Company Directors - Tax-efficient Payment Strategies

1. Salaries

1.1. A director’s perspective

1.2. Minimum salary, the NMW and the NLW

1.2.1. Minimum salary

1.2.2. An NMW or NLW salary

1.2.3. Recording the salary

1.3. Salary waiver

1.4. Spouse’s/family members’ salary

1.5. Year-end bonus

1.6. National Insurance employment allowance

1.7. Key points

2. Benefits and expenses

2.1. A director’s perspective

2.2. Tax relief for the company

2.3. School fees

2.3.1. Paid for by your company

2.3.2. Grandparent schemes

2.3.3. Buy-to-let scheme

2.4. Moving home

2.5. Cheap-rate or interest-free loans

2.5.1. Loans under £10,000

2.5.2. Interest on loans over £10,000

2.5.3. Fixing the interest calculation

2.6. More than one company car

2.6.1. For a dependant

2.6.2. Classic cars

2.7. Is a van cheaper?

2.8. Computers and other IT equipment

2.9. Childcare vouchers

2.10. Travel and subsistence costs

2.11. Trivial and minor benefits

2.12. Key points

3. Dividends and distributions

3.1. A director’s and shareholder’s perspective

3.2. Timing payments of dividends

3.3. Dividend waivers

3.4. Separate classes of shares

3.5. Dividend income for a spouse or partner

3.6. Dividend income for children

3.7. Key points

4. Pension scheme strategies

4.1. The director’s perspective

4.2. The tax-advantaged pension scheme

4.3. Corporation tax relief for your company

4.4. Salary sacrifice option

4.5. Contribution without earnings

4.6. Ownership of the company’s assets

4.6.1. Your company’s premises

4.6.2. Buying equipment

4.7. Pension fund borrowings summary

4.8. Contribution for a spouse

4.9. Key points

5. Financing the company

5.1. The director’s perspective

5.2. Claiming interest on loans to buy shares

5.3. Company borrows to acquire assets for your use

5.4. Interest on shareholder loans to the company

5.5. Seed enterprise investment scheme

5.6. Key points

6. Capital allowances

6.1. A director’s perspective

6.2. Timing

6.3. Assets specifically qualifying for a 100% tax deduction

6.3.1. Cars

6.3.2. Capital allowances super deduction

6.4. Key points

7. Buying another company

7.1. The director’s perspective

7.2. Assets or shares?

7.3. Allocation of purchase consideration

7.4. Hive-downs

7.5. Tax due diligence

7.6. Insist on a tax indemnity

7.7. Losses

7.8. Borrowing costs

7.9. Stamp duty

7.10. VAT

7.11. Buy-to-sell shares

7.12. Termination payments

7.13. Deferred consideration

7.14. Key points

8. Reorganising share ownership

8.1. The director’s perspective

8.2. Gifts of shares to spouse

8.3. Gifts of shares to family members, employees, etc. 

8.4. Gift holdover relief

8.5. Preventing unnecessary employment tax charges

8.6. Purchase own shares

8.6.1. Phased share buy-back

8.6.2. Funding a buy-back

8.7. Key points

9. Succession planning

9.1. The director’s perspective

9.2. Preserving business property relief

9.2.1. Avoiding the investment tag

9.2.2. Excepted assets

9.3. Passing shares to the next generation

9.3.1. Lifetime transfers

9.3.2. Value freezing schemes

9.3.3. Passing shares on death

9.3.4. Planning points for your will

9.3.5. Avoiding a binding contract

9.4. Pre-owned assets tax (POAT)

9.5. Business premises personally owned

9.6. Key points

10. Selling your company

10.1. The director’s perspective

10.2. Timing

10.3. Sale of assets and trade

10.3.1. Double tax charge

10.3.2. Apportionment of sale consideration

10.3.3. Hive downs

10.3.4. VAT

10.3.5. Selling part of your company’s business

10.4. Sale of shares

10.4.1. Pre-sale tax planning strategies

10.4.2. Pre-sale dividend

10.4.3. Termination payments

10.4.4. Special pension contributions

10.4.5. Inter-spousal transfers

10.4.6. Pre-sale transfers and using family trusts

10.4.7. Becoming non-resident

10.4.8. Use offshore companies/trusts?

10.4.9. Deferred consideration

10.4.10 Using a profit warranty

10.5. IHT

10.6. Warranties and indemnities

10.7. Anti-avoidance

10.8. Key points

11. Winding up your company

11.1. The director’s perspective

11.2. Capital distribution

11.3. Availability business asset disposal relief

11.4. Last minute dividend?

11.5. Phoenix companies

11.6. Key points

12. Going offshore

12.1. The director’s perspective

12.2. Your own offshore accounts/assets

12.2.1. Offshore myths

12.2.2. An “old” undisclosed account

12.2.3. Error on last year’s return?

12.3. Your company’s offshore interests

12.3.1. Company invests offshore - safely

12.3.2. An offshore company

12.3.3. Offshore property company

12.4. Costs and compliance

12.5. Offshore jurisdictions

12.6. When selling your UK company

12.6.1. Use offshore companies/trusts?

12.6.2. Becoming non-resident

12.10. Key points

13. Trusts

13.1. The director’s perspective

13.2. The trusts tax regime

13.3. Use of trusts

13.4. Tax implications of creating a trust

13.5. Types of trust

13.5.1. Bare (or simple) trusts

13.5.2. Interest in possession (IIP) trusts

13.5.3. Discretionary trusts

13.6. Key points

14. Income tax planning

14.1. Introduction

14.2. What’s tax free?

14.3. Getting your allowances

14.4. Avoiding the high income child benefit tax charge

14.5. Children’s income

14.6. Overseas income and offshore bonds

14.7. Independent taxation

15. Capital gains tax planning

15.1. Introduction

15.2. What capital gains are not taxable?

15.3. How does capital gains tax work?

15.4. Business asset disposal relief (previously entrepreneurs’ relief)

15.5. Losses and gains

15.6. How to avoid the bed and breakfasting rules

15.7. Switching relief between homes

15.8. Selling your garden

15.9. CGT and death

15.10. Further timing issues

15.11. Enterprise investment scheme (EIS) and holdover (deferral) schemes

15.12. Seed enterprise investment scheme (SEIS)

15.12.1. SEIS tax breaks

15.12.2. Conditions to qualify for SEIS

16. Inheritance tax planning

16.1. Introduction

16.2. What is tax free?

16.3. The nil rate band

16.3.1. Spousal exemption

16.3.2. The residence nil rate band in more detail

16.4. The seven-year rule and taper relief

16.5. Gifts with reservation

16.6. Keeping value outside your estate

16.7. Skipping a generation

16.8. Two nil rate bands for spouses

16.9. Properly drafted wills

16.10. Changing someone’s will after they have died

16.11. The use of trusts

16.11.1. Pension benefits and trusts

16.12. Reduce your IHT bill by giving to charity

17. National Insurance planning

18. Year-end tax planning

19. Appendix

The Scottish tax rates